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U.S. Records Moderate Job Gains in December as Unemployment Remains Low

U.S. Records Moderate Job Gains in December as Unemployment Remains Low

National job gains for December came in a bit below expectations and were moderate compared to recent readings.

According to the Bureau of Labor Statistics, the U.S. economy added 145,000 jobs in December, the third-lowest monthly gain of 2019. The national unemployment rate remained at 3.5%, maintaining the 50-year low it attained earlier this year. As we have been expecting, it appears the tight labor market may be limiting job gains.

The monthly positive gain streak continued to 111 consecutive months, or more than nine years. However, the average monthly growth rate in calendar 2019 was at about 175,700 jobs, the lowest showing since 2011. In comparison, the 12-month average for 2018 was 223,250 jobs. However, the average monthly unemployment rate in 2018 was 3.9%, compared to an average of 3.7% for 2019. In 2017, the average monthly employment gain was closer to the 2019 showing at 179,400 jobs.

Average hourly earnings growth for all employees was also weaker than average at 2.9% in December. Despite this showing, earnings growth has averaged 3.2% for the calendar year. The monthly wage figure increased $0.03 between November and December, and was up $0.79 from December 2018, to $28.32. Wage growth has been slowly creeping up, as it averaged 3% in 2018 after a showing of 2.6% in 2016 and 2017.

A little more than 2.1 million jobs were added in 2019 compared to about 2.7 million in 2018. This annual growth expanded the job base by 1.4%. This is the second time in three months that the annual growth rate has dipped below 1.5%. While the December rate is 40 basis points (bps) below the growth rate from December 2018, it is only 10 bps below the rate from December 2017 (1.5%). Revisions to the previous two months’ numbers resulted in 14,000 fewer jobs than initially reported, as October’s job gain figure was revised down from 156,000 to 152,000 jobs, and November’s gains were revised from 266,000 to 256,000 positions.

The civilian labor force (CLF) participation rate has been improving slightly in the past few months. The reading was 63.2% in December and has averaged 63.1% for the past year. The employment-population ratio of 61.0% was unchanged for the past four months but up 40 bps from December 2018. The total number of unemployed (5.753 million) is down about 533,000 people from last year, and the number of people not in the labor force who currently want a job has fallen from 5.3 million last December to 4.8 million in December 2019. Compared to last month, the number of unemployed decreased by 58,000, but the unemployment rate was virtually unchanged as the civilian labor force continues to increase.

The number of job leavers increased by 53,000 from November to 829,000 but was up only 2,000 from last year, as the proportion of unemployed due to leaving jobs increased to 14.5% of all unemployed persons. Job leavers are workers who quit or voluntarily leave their previous job and immediately began looking for new employment. The number of part-time workers for economic reasons (4.15 million in December) fell by 507,000 from December 2018, and the number of part-time workers for non-economic reasons increased by 350,000 to 21.2 million. The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell 20 bps to 6.7% from November, its fourth straight month below 7% and the lowest rate since the measure was revised in 1994.

The number of long-term unemployed workers (out of work for 27 weeks or more) fell by 125,000 from December 2018 to 1.19 million, and the average duration of unemployment fell to 20.5 weeks from 20.7 last year. The number of multiple jobholders increased by 28,000 year-over-year to 8.06 million. Meanwhile, the number of discouraged workers not in the workforce (277,000) dropped by 98,000 from one year ago.

Industry Focus

Monthly job gains by industry for December were heavily concentrated in just three industries. The strongest gains were in the Leisure and Hospitality (+40,000), Trade, Transportation and Utilities (+40,000), and Education and Health Services (+36,000) industries. Only the Mining & Logging and Manufacturing segment lost jobs.

• The Leisure and Hospitality industry saw a strong influx of jobs in the food services and drinking places subsector (+15,900) for December, while the amusements, gambling, and recreation subsector contributed another 14,700 jobs to the industry’s 40,000-job gain for the month.

• The Trade, Transportation and Utilities sector had a banner month for gains in retail trade (+41,200), but that was primarily in one subsector (clothing and accessories stores, +33,200). Wholesale trade added 8,300 jobs while transportation and warehousing lost 10,400 jobs in December, mostly in couriers and messengers (-9,400).

• The Education and Health Services industry had a strong monthly gain of 36,000 jobs, as ambulatory health care services (+23,100) and hospitals (+8,800) led all subsectors. Social assistance and educational services contributed less than 2,000 jobs each in December.

• The Construction segment had a strong rebound month with an additional 20,000 jobs in the trade industry. Specialty trade contractors (+14,100), particularly nonresidential specialty trade contractors (+9,800) had a good month, while nonresidential building construction added a solid 5,100 jobs.

• The Professional and Business Services industry gained only 10,000 jobs in December, primarily in the higher-paying professional and technical services sector (+9,200). The administrative and waste services sector’s loss of 2,700 jobs was hampered by a contraction in services to buildings and dwellings (-5,700) and business support services (-3,300), offsetting 6,400 new jobs in temporary help services.

• The Government sector’s 6,000-job gain for December was due to strong gains at the local level (+14,000) as Federal employment was unchanged and state government employment fell by 8,000 jobs.

• The Financial Activities industry’s net gain of 6,000 jobs was almost entirely in the credit intermediation and related activities (+5,300) subsector.

• The Other Services sector gained 5,000 jobs in December, with solid contributions among two of its three subsectors – membership associations and organizations (+3,200) and personal and laundry services (+3,000). The repair and maintenance subsector lost 1,500 jobs.

• The Information industry’s 3,000-job gain in December was entirely in the motion picture industry (+3,600), as both the telecommunications (-1,200) and publishing (-700) subsectors retrenched.

• The Mining and Logging industry lost 9,000 positions in December as support activities for mining (-8,200) continued to weigh down the industry for the month.

• The Manufacturing industry saw payrolls shrink by 12,000 jobs in December with both durable goods (-7,000) and nondurable goods (-5,000) sharing the loss. Fabricated metal products (-7,200) and food manufacturing (-3,700) were the biggest losers for the month.

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